China restricts exports of graphite, a key material for electric-vehicle batteries, and Wall Street sinks
In this week’s last trading session, Wall Street fell as Treasury yields spiked, while the Chinese authorities moved to restrict the export of graphite. China restricts exports of graphite, a key material for electric vehicles. By restricting graphite exports, China will ensure maintaining its manufacturing dominance. However, the main reason behind the sudden move is expected to be a direct response to Washington restricting AI chip exports to China.
On a global scale, the impact of this restriction will affect the electric car manufacturing activities in the U.S., which includes Tesla and Nasdaq Composite. The effects are based on two economic facts: first, China is the world’s top graphite producer and exporter, refining over 90% of the world’s graphite for EV batteries. Second, the fact that major graphite buyers from China include the U.S., South Korea, Japan, and India is enormously dangerous to EV manufacturing activities. On top of that, the U.S. has been focusing its efforts to impose restrictions on China’s access to advanced technology over national security concerns.
Beijing’s decision to implement special export permits for three grades of graphite, effective December 1, while removing temporary controls on five less sensitive graphite items used in various industries, represents a strategic move in safeguarding its national interests and strengthening the security of the global supply chain. This action underscores China’s commitment to maintaining its dominant position in the manufacturing sector and signifies its response to international restrictions on technology and materials.
Aimed at ensuring global supply chain security and national interests, not targeting any specific country.
Analysts expect increased graphite prices due to supply and demand imbalances, potentially impacting EV production.
Cutting off the world from graphite would have significant consequences for the EV industry and international relations. Ivan Lam, senior analyst at Counterpoint Research, says “the material’s prices will likely increase due to supply and demand imbalances, including Russia.”
Meanwhile, in Wall Street, the Middle East tension and recent events and protests by pro-Palestine have sunk Wall Street. Sooner or later, the continued bombing by Israel in Gaza was expected to create a huge negative wave among the public. The U.S. aims to aid Israel, which angers the pro-Palestines around the globe.
As with any geopolitical tension or war, the stock market is among the affected sectors. On the other hand, U.S. Treasury yields climbed by 5%, which is the highest increase since the 2007 crisis. Yet the benchmark fell slightly hours later.
The U.S. 500 benchmark was down by 0.93% to 4.238 basis points, and the tech-heavy compost Nasdaq fell by 1.19% to 13.027 basis points. The Dow Jones Industrial Average fell by 0.93% to 33.214 basis points.
Elsewhere, In Asia, Japan decreased by 0.5%. Hong Kong fell by 0.7%. China also dropped by 0.7%. India experienced a 0.4% decline.
In Europe, at midday, London was down by 0.9%. Paris saw a decrease of 1.2%. Frankfurt had a decline of 1.3%.